Finance officials detail amounts in special funds

SACRAMENTO, Calif. 
Gov. Jerry Brown's finance department will release a detailed review of California's 560 special funds on Friday, an effort that began after revelations that the state parks department had failed to report nearly $54 million in two such funds.

The effort is intended to reconcile the fund balances the administration has on the books with those shown by the state controller's office, which uses different accounting methods. The exercise is important because the finance department's numbers are used to develop the state's general fund budget each year and because lawmakers take millions of dollars in loans from the special funds each year to close budget deficits.

The finance department's review should identify just how much money is in each of the special funds.

Brown told The Associated Press on Thursday that he was skeptical the review would find extra cash.

"Don't count on a lot of additional money," he said in a telephone interview. "If there's any money, we will find it. And you have to distinguish between different accounting systems and real dollars."

California's overall budget includes more than $39 billion from special funds, which are generated from taxes and fees for things such as recycling and vehicle registration.

There are two distinct issues related to the special funds: The finance department report due Friday is largely an accounting exercise to square the special fund balances reported by finance and the controller's office.

Separately, the state parks department was actually underreporting the amount of money it held in two special funds, for recreation and off-highway vehicles. That underreporting and why it happened is being investigated by the state attorney general's office.

Whether any other state government officials were purposely hiding money from the governor's office and Legislature is undetermined.

On July 20, state Natural Resources Agency Secretary John Laird, whose agency oversees the parks department, revealed that the department sat on $53.8 million in surplus money dating back 12 years even as the state was threatening to shut 70 parks because of its ongoing budget crisis.

A preliminary investigation showed parks officials underreported money in the two funds as far back as 2000.

Parks director Ruth Coleman stepped down, and her chief deputy, Michael Harris, was let go. Coleman maintains she was unaware of the surplus.

Finance Department spokesman H.D. Palmer said different bookkeeping procedures and different times when an expense is logged account for some of the discrepancies between the balances kept by his department and the controller's office.

For example, the two sets of balances for the state's Mental Health Services Fund, which is funded by a tax on millionaires to assist the mentally ill, are off by $570 million. Of that amount, $470 million resulted from the finance department subtracting money already allocated to local governments, while the controller logged the check at a later date.

Recent accounting tricks used by state lawmakers to balance budget deficits also have made it more complicated for finance officials to reconcile the figures. In one case, the state pushed back its last payroll day of the fiscal year by one day, from June 30 to July 1, to achieve a budget savings on paper.